Market Indicators & Strategy Report Aug. 8, 2014

This week our major market indicators crossed over into bullish territory. Any score at 60 or above under our methodology qualifies as bullish, and this week hit 60.50. The one major change since last week was in the improved score of the market value of equities vs. the replacement cost of the associated assets. This result was just under 1.0, at a 0.9964 ratio. We compare the market value of equities, ex. Financials, to the net worth of non-farm, non-financial corporate businesses. This is our modified calculation of Tobin’s Q ratio. At under one-times, we score this as bullish, and that tipped the scales for the entire MMI scoring into the bullish camp. Essentially all other indicators were unchanged from the prior week. Thus, we are constructively bullish on domestic U.S. equities at this time. We recognize this opinion runs counter to the din of voices in the market place warning that the sky is falling, yet our data is giving us a bullish indication. Once again, we reiterate our rationale for what we are doing here: we do not hang our hat on one data point as a tell-all, but rather evaluate many factors across the market spectrum to arrive at a weighted score.

MMI - Major Market Indicators

Singular’s Major Market Indicators (MMI) analysis weighs a large number of factors impacting the domestic equities market, gauging the temperature of the market. The MMI is a yardstick which measures whether we should be more bullish, or neutral, or bearish.

Rather than rely on anecdotes, or just one or two rules of thumb, we scour the investment landscape, scoring the indicators we believe are most representative of influencing the near to mid-term outcome of the market. We weigh and total our scores, producing a composite total to guide our investment posture. Is the data telling us of impending bearishness? Or should we expect a breakout of bullishness? Or are we somewhere in—between? We produce an MMI score weekly answering these questions.